Comparative Claims in Advertisements: Generic Comparison VS Disparagement
The Competitor to be feared is the one who never bothers about you at all but goes on making his business better all the time"
- Henry Ford
Certainly, this quotation makes logical business sense and if followed in letter and spirit would certainly lead to free and fair competition in business apart from benefiting the consumers to a substantial extent. However, in the present-day business scenario, increasing profitability either by price wars or by expanding the market is an archaic business practice. The market dynamics, high competition as well as the emerging media choices have made it obligatory for the enterprises to strike a chord with their customers through "emotional stimulation" better known as ADVERTISING.
The term advertising has emanated from the Latin term, ad vertere means "to turn towards". It is a positive action which means convincing the consumers to opt for your product/brand. However, in today's context, the whole thrust of advertising is fast tilting towards "turning the consumers away from competitor products or brands". Such a negative approach is often backed by false and misleading claims to establish supremacy of one's own products and often stooping to the extent of deriding or denigrating competing products. In simple terms, the trend of claiming "I am at the top" is fast being replaced by the claim "he is at the bottom". Advertising claims do not need `100% proof or substantiation and more often than not are more of "puffery" or "creative rhetoric", with eye-catching models and celebrities or ideas which immediately click with the current trends. To be candid, advertising has been wholeheartedly accepted by the society as "legalised lying" whereby you can fool all the people all the time if the advertising is right and the budget is big enough. Advertising has also been described as the science of arresting human intelligence long enough to get money from it.
What exactly is "Denigration/Disparagement?
The New International Webster's Comprehensive Dictionary defines "disparaging/disparagement" to mean "to speak of slightingly under value, to bring discredit or dishonour upon, to act of depreciating, derogation, a condition of low estimation or valuation, a reproach, disgrace, an unjust classing or comparison with that which is less worth and degradation."
The present-day Advertising is ubiquitous, though it has emerged as one of the strongest marketing tools for any business entity. It has been rightly remarked that the man who stops advertising to save money is like the man who stops the clock to save time".
India, with its developing economy, is providing the advertisers with numerous growth opportunities, along with expanding media channels. Economic growth has also led to an increase in consumer spending power, producing a consumer-conscious and affluent brand. The Indian advertising industry is expected to be Asia's fastest-growing advertisement market after China over the forecast period. Further, the increasing penetration of smartphones and the internet in the country is encouraging the use of digital advertising, which is anticipated to aid the growth of this industry in India over the forecast period. The Indian advertising industry in 2021 stood at ₹70,715 crore, up 18.6% over 2020. Of this, fast-moving consumer goods (FMCG) brands have the highest contribution of 34% of ₹23,736 crore towards the entire advertising industry, followed by e-commerce at 14%, ₹9,619 crore and automotive at 7% or ₹4,745 crore. (Source https://www.livemint.com/industry/advertising)
Comparative Advertising: The Modern-day mantra
Comparative advertising is as essential for the consumers as free and fair competition is for the growth of the economy. Free and fair competition ultimately benefits the consumers at large and so does comparative advertising. In any case the history of comparative advertising dates back to the beginning of commerce itself. It has always been normal for an advertiser to draw a comparison between the qualities of his products/services vis-à-vis a competitor, so as to project the superiority of his product/service or the inferiority of the competitor's product or service. Comparative advertisements could be either indirectly or directly comparative, positive, or negative, and seeks "to associate or differentiate the two competing brands". Comparative advertising displays a comparison of two different brands on numbered variants like price, quality by referring the alternative brand by name, visual illustrations, or other distinctive attributes. Advertisers employ this technique to increase their visibility in the market and to promote their product.
In India, the law on comparative advertising has developed through judicial precedent. During the late 1990s, courts took the view that while calling one's product as the best ('puffing up') is permissible, any statement or image which demeans or disparages a competitor's product is not. This is exactly the difference between comparative advertising and denigrative advertising. The term 'disparagement' means "casting in bad light or degrading or derogating something". Legal dictionaries define disparagement as "To denigrate, to speak ill of or disrespectfully". The statement 'my goods are better than X's' is only a more dramatic presentation of what is implicit in the statement 'my goods are the best in the world' and would not be actionable. However, the statement 'my goods are better than X's because X's are absolute rubbish' would be actionable." This is a fit case of disparagement.
Comparative Advertisements vs. Product Disparagement:
Walking the thin line: - Where does the relief lie?
The terms "denigration or disparagement" have not been defined or identified as 'actionable wrongs' or offences under any statute. While the consumers impacted by false advertising campaigns have a remedy under the Consumer Protection Act, 2019, advertisers or brand owners have no specific remedy under any specific statute and hence have to proceed in a civil suit under the Civil Procedure Code and applying the principles of common law on grounds of slander, malicious falsehood, libel and denigration. A complaint can also be filed with The Advertising Standards Council of India ("ASCI") - a self-regulatory body which has adopted a Code for self-regulation in advertising, amongst other things, providing guidelines for comparative advertisements. It provides that Advertisements must not denigrate, attack, or discredit other products. Comparison between rival products must be factual and capable of substantiation and should not distort facts or mislead customers either with respect to the advertised product or with the one it is compared.
Recent case laws on Comparative advertising and denigration
The Delhi H.C. in a recent case of Zydus Wellness Products Ltd Vs Dabur India Ltd {CS (COMM) 304/2022 and I.A. 7312/2022, 17882/2022} refused to grant an interim injunction plea made by Zydus Wellness' to restrain Dabur from airing two of its advertisements promoting its product Glucoplus-C Orange. Zydus contended that the advertisement promoting Dabur Glucoplus-C Orange disparaged Zydus' glucose powder named Glucon-D. The advt showed two girls competing in a race. While one of them drank Glucoplus-C Orange, the other drank an orange glucose powder drink. The Dabur girl was shown finishing the race first.
Zydus alleged that the commercial denigrated all other orange glucose powder drinks as the commercial gives the impression that they are entirely inefficacious in providing energy and that only the Dabur product is capable of providing energy.
The Delhi High Court rejected Zydus plea for interim injunction and held that:
(i) It is permissible for an advertiser to make advertisements containing a 'generic comparison' with the product of a related or same category without any direct reference to any competitor.
(ii) In order to portray a particular product as being superior or better than existing products, a generic comparison highlighting the strength of the product without launching a negative campaign against its competitors ought to be permissible.
(iii) Objections cannot be raised unless representation being made is absolutely false or misleading.
(iv) After examining the advertisements, the Court concluded that the commercial in question only highlights the qualities of Dabur's product and does not disparage any orange glucose powder drink.
(v) Further, there was no misrepresentation of facts. It was an admitted position that Dabur's product had 25% more glucose than Zydus' product, and therefore, the advertisement was by and large truthful.
(vi) Zydus raised a frivolous argument that more glucose does not translate into higher energy also does not hold ground for two reasons. First, the storyboard of the advertisement merely shows "25% more glucose in every sip". This is not misrepresentative considering the contents of the Dabur's drink. Further, as far as the claims of 'instant energy' are concerned, Zydus's own product packaging, and its advertisements expose the Plaintiff's own stand is that glucose gives instant energy. The Plaintiff cannot take a different stand for its own product and Defendant's product.
In another case of Hindustan Unilever Limited (HUL) And Vs USV Private Limited (USV) on 21 January 2021 {Commercial Appeal No. 1919 of 202}, the Division bench of the Hon'ble Bombay High Court dismissed an appeal filed by USV Private Limited (USV), owner of SEBAMED soap brand, challenging a single-judge order restraining the brand from broadcasting advertisements in print or electronic media, ridiculing Hindustan Unilever (HUL) and Wipro soap brands.
(i) HUL is the leading manufacturer and marketer of consumer goods including different kinds of soaps, which are marked under brand names LUX, DOVE, PEARS, and RIN.
(ii) USV is a competitor dealing in the same goods and the subject matter of controversy concerns advertisements of its products denigrate the soaps marketed by HUL under the brand names LUX, DOVE, and PEARS.
(iii) USV 's advertisements, were titled as "Sach Coming Soon" and "Filmstars Ki Nahi Science Ki Suno", appear to be comparing two rival soaps, which is to say, soaps marketed by the USV under the brand name SEBAMED, and different soaps marketed by HUL under the brand names LUX, DOVE, and PEARS. The advertisements compare pH values, which is said to be an index of the alkalinity of toilet or bathing soaps, of the rival products. The advertisements claim that the pH value of the USV 's soap is 5.5 as against the pH value of 7 and 10, respectively, of DOVE (pH value of 7) and LUX and PEARS (pH value of 10). The advertisements claim that anything above pH value of 6 is not safe for use with sensitive skin, and taking up a position that its soap is a safe product, whilst the HUL's products are unsafe for sensitive skin;'
(iv) HUL's grievance in this behalf was partly accepted by the learned Single Judge. USV was restrained from using the terminology 'safe' and 'unsafe' whilst comparing the two products.
(v) HUL were still aggrieved since whilst preventing the Respondent from using terms 'safe' or 'not safe', whilst comparing the two products, the learned Judge had allowed the USV to use the terms 'ideal' and 'not ideal' in place of the original terms 'safe' and 'unsafe.'
(vi) HUL contended that to the extent USV is permitted to use the terms 'ideal' or 'not ideal' whilst comparing its product with the HUL products, there is nevertheless a case of denigration. HUL contended that whilst it may be permissible for USV to describe its own product as 'ideal', it should not be permitted to describe HUL products as 'not ideal.'
(vii) A particular reference was made in this behalf to an advertisement of the USV where apropos respective pHs of the two products, the HUL product "DOVE" was said to be "not perfect for sensitive skin" which in effect tantamounted to a clear instance of disparagement.
(viii) In the course of proceedings, USV submitted that the sentence "It's not perfect for sensitive skin", appearing in the advertisements of SEBAMED, whilst comparing it to the DOVE Soap/Bar, shall be deleted from all future advertisements.
(ix) Thus, the only controversy which remained for discussion was the use of the words 'ideal' and 'not ideal' in the impugned advertisements. USV had relied on scientific data available in the public domain in that behalf. There was thus, nothing wrong, at this threshold stage, in the USV comparing the pH of the two products and claiming its product to be ideal for sensitive skin.
Some critical S.C. and H.C. judgements in respect of comparative advertisements
Citation | Facts (in brief) Decision |
In the case of Tata Press Ltd. v. Mahanagar Telephone Nigam Limited & Ors. reported in MANU/SC/0745/1995 : AIR 1995 SC 2438. | The Apex Court has laid down the following principles with regard to advertising: The public at large has a right to receive the "commercial speech". Article 19(1) (a) not only guarantees freedom of speech and expression, it also protects the rights of an individual to listen, read and receive the said speech. As far as the economic needs of a citizen are concerned, their fulfilment as to be guided by the 'information disseminated through the advertisements'. The protection of Article 19(1) (a) is available to the speaker as well as the recipient of the speech. The recipient of "commercial speech" may be having much deeper interest in the advertisement than the businessperson who is behind the publication. An advertisement giving information regarding a lifesaving drug may be of much more importance to general public than to the advertiser who may be having purely a trade consideration. "Commercial speech" is a part of the freedom of speech and expression guaranteed under Article 19(1) (a) of the Constitution. Our Constitution itself lays down in Article 19(2) the restrictions which can be imposed on Fundamental Right guaranteed under Article 19(1)(a) of the Constitution. The "commercial speech" which is deceptive, unfair, misleading and untruthful would be hit by Article 19(2) of the Constitution and can be regulated/prohibited by the State." The Supreme Court opined that it is not good to declare own goods to be the best and better than his competitors' but if it does so, the advertiser must have some reasonable factual basis for the assertion made. |
Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd., (1999) 7 SCC 1 | The Supreme Court observed that a distinction would always have to be made and latitude given for an advertisement to gain a purchaser or two. This latitude cannot and does not mean any permission for misrepresentation but only a description of permissible assertion is not always easily discernible." The Supreme Court recognised and applied the rule of civil law, "simplex commendatio non obligat" - simple commendation can only be regarded as a mere invitation to a customer without any obligation as regards the quality of goods. It was observed that every seller would naturally try and affirm that his wares are good enough to be purchased (if not better than those of a rival). |
Reckitt and Colman of India Ltd. vs. M.P. Ramchandran and Anr. [1999 (19) PTC 741 CALCUTTA HC | The H.C. held that the assertion made in the advertisement was clearly related to the product of the petitioner in that case and was made with a view to disparage and defame the petitioner's product. The Court laid down the following principles to be adopted while deciding on the critical question of denigration. (a) A tradesman is entitled to declare his goods to be best in the world, even though the declaration is untrue. (b) He can also say that his goods are better than his competitors', even though such statement is untrue. (c) For the purpose of saying that his goods are the best in the world, or his goods are better than his competitors, he can even compare the advantages of his goods over the goods of others. (d) He, however, cannot, while saying that his goods are better than his competitors, say that his competitors' goods are bad. If he says so, he really slanders the goods of his competitors. In other words, he defames his competitors and their goods, which is not permissible. (e) If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation. |
The Trademarks Law (Trademarks Act 1999) also permits comparative advertising, albeit with precaution
Trademark is an intellectual property (I.P right) and hence any infringement thereof can entail serious legal action under the Trademarks Act. However, the question that arises for consideration is "What happens in case of comparative advertisements which display or refer to the T.M of the competitor, so as to tout the superiority of the product versus the product of the competitor?
Section 29(8) of Trademarks Act, 1999 stipulates that:
A registered trademark is infringed by any advertising of that trademark if such advertising:
(a) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; or
(b) is detrimental to its distinctive character; or
(c) is against the reputation of the trademark.
Section 30 (1) of Trademarks Act, 1999 stipulates that:
(1) Nothing in section 29 shall be construed as preventing the use of a registered trademark by any person for the purposes of identifying goods or services as those of the proprietor provided the use--
(a) is in accordance with honest practices in industrial or commercial matters, and
(b) is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trademark.
The said provisions of the Trademark Act in effect permit comparative advertising involving display or referral to the registered trademark of the competitor for the purpose of identifying goods or services of the competitor, subject however to the condition that such use must only be done in accordance with the honest and fair-trade practices. There should not be any mala fide intent to gain advantage of competitor's goodwill behind such use.
The relevant case law in this regard is:- Hindustan Reckitt Benckiser (India) Ltd. reported in MANU/WB/0528/2013:
2014(2) CHN (CAL) While interpreting the provision contained in Section 30 of the Trade Marks Act, 1999 it was held as under:
"In respect of comparative advertisements conceptualised under section 30 of the Trade Marks Act, 1999 such depiction shall not, inter alia, be unfair or detrimental to the "repute" of the trademark. (See L'oreal SA v. Belhre NV [2010] RPC 23) in other words the reputation of the goods cannot be lowered. Moreover, the use of the mark has to be honest. (See 307 Barclays Bank Pic v. RBS Advanta reported in [1996] R.P.C 307)".
Comparative advertisements: Position in the US
The US, being one of the forerunners of the free-market economy, has fairly liberal rules regarding comparative advertising. In their system of law, denigration of another's product is not actionable if such attack, discrediting, or criticism is truthful and not expressly or impliedly deceptive. Carter Products, Inc. [60 FTC 782]. Under US trademark legislation, a comparative advertisement is bad in law if it is literally false or of a deceptive nature which might pass on an implied message even though the claim is literally true or is ambiguous. However, it is up to the person claiming disparagement to prove that such an implied message which was injurious was passed on to the viewers or consumers. The Federal Trade Commission which regulates advertising has also taken a liberal view that there should be no restraint of truthful comparative advertising. Further, the US also allows goods or products of one kind to be compared with goods or products of a dissimilar kind.
Position in the E.U.:
The EU has a narrower scope for comparative advertising, as compared to the US position. The UK, which earlier followed common law principles while adjudging claims of disparagement, is now guided by the EU directives on the topic. The guidelines lay down that the comparative advertisements should not be misleading and must not discredit or denigrate the trademarks or goods of another. However, they are allowed to objectively compare one or more material, relevant, verifiable, and representative features of such trademarks and products.
Section 11(2) of the UK Trademarks Act, 1994 permits only for the fair comparison of goods to be done between the advertiser and the competitor. The comparison must be an honest one. If these conditions are met then it will be admissible in this provision, if it is not met then will not be admissible under any provision
Some leading E.U case laws
Citation | Facts (in brief) Decision |
Barclays Bank v. RBS Advanta [1996] RPC 307 | In this case, RBS Advanta distributed a brochure which contained a comparative table of the fees and interest rates of different credit card companies which include Barclaycard Visa, which is a registered mark of the Barclays Bank. So, Barclays Bank considered this act of the defendant that it has infringed its mark. The Court held that the objective of the defendant's act was honest to inform the consumers. The defendant also stated that comparative charts gave them a better deal with the consumers. Hence, comparative advertisement was allowed by the Court. |
British Airways plc v. Ryanair Limited [2000] EWHC Ch 55 | In this case, Ryanair prepared comparative advertising by means of the banner where at the top of the banner, a comparison of the pricing was made which shows that British Airways airfare is five times costlier than Ryanair air fare but in reality, it was three times costlier than the Ryanair airfare. So, British Airways alleged that Ryanair infringed the trademark of British Airways. Even though the Ryanair has made the wrong statement of comparison, the Court felt that it did not infringe the plaintiff's trademark. But the Advertising Standards Authority (ASA) stated that the statement by Ryanair makes false offences against British Airways. |
Failure of Self-Regulatory mechanism for Advertising: Should the Indian Courts be really burdened with deciding on claims and counter claims in advertisements? Is there no summary procedure for curbing denigrative advertisements?
The Advertising Standards Council of India (ASCI) was established in 1985 as a self-regulatory body (SRO) for Self-Regulation in Advertising. The Cable Television Network Rules 1994 & The Cable Television Network (Regulation) Ordinance are laws which grant some degree of legitimacy to Advertising Standards Council of India (ASCI), both stating that any Advertisement that violates ASCI's Code of Self-Regulation shall not be broadcasted in any form. However, despite the best of intentions, despite the finest
of brains pooled together and despite the positive spirit within the advertising Industry to effectively regulate advertising, ASCI is toothless in the absence of statutory recognition or powers. To complicate the matters further, due to its faulty procedures and misplaced overzealousness and illogical hurry to regulate, it has often transgressed and overlooked the core DNA of any regulator viz. adherence to the principles of natural justice and affording adequate opportunity of being heard. The strictures from the High Courts on the typical ASCI's style of functioning are of a serious nature and in fact question the very foundation and pillars of ASCI.
(i) In Teleshop Teleshopping Vs The Advertising Standards Council of India & Anr (Notice of Motion (L) No- 1393 of 2015 in Suit No. 492 of 2015 (Bombay HC 's observations on the conduct of ASCI in restraining advts are interesting " This is yet another instance of the completely high-handed, unlawful and unilateral conduct of the 1st Defendant, the Advertising Standards Council of India ("ASCI"), a self-appointed watchdog of public advertisements and similar materials in print and media.
(ii) The Delhi H.C. in the case of Kent RO Systems Ltd & Anr vs Amit Kotak & Ors CS(COMM) 1655/2016 & IA No.15914/2016 overruled the decision of the Consumer Complaints Council (CCC) of ASCI. Similarly, several Courts have struck down the decisions of the CCC in relation to Hero Motocorp, Amazon, MTS 3G etc.
(iii) Several questions are also raised as to the composition of the members of ASCI, transparency in regard to appointment of Board of Governor's or members.
Imperative need for a specialized dedicated Statutory Body for Advertisements in India.
The biggest hidden secret existing in contemporary discourse is that the power wielded by statutory bodies is formidable. The Corridors of power conceptualise and render the act with powers crowned by the sanction of law. India, being the World's second largest democracy with a humongous population base, needs a statutory body to clearly define the powers, functions, and objectives of the body. An Act of Parliament in regard to the same accords unparalleled authority to such a body compared to a non-statutory body. A statutory body wields a stronghold over noncomplying industries.
Conclusion
Comparative Advertising, when truthful and non-deceptive, is a source of valuable information to consumers and may assist them in making rational purchase decisions.
The debate in regard to the jurisprudential justification of comparative advertising is always open. Proponents of comparative advertising consider it to be a positive thing in the world of advertising. They think it is not misleading rather promotes healthy competition. It only compares goods or services meeting the same needs or intended for the same purpose. As per their view, comparative advertising does not create confusion in the marketplace between the advertiser and a competitor. However, the opponents of comparative advertising believe that these kinds of practices hamper the reputation of goods of the competitor. They argue that the major objective behind comparative advertising is to gain unfair advantage at the cost of competitor's goodwill.
The above analysis of the case law clearly shows that courts in India have gone beyond the days of White v Mellin (House of Lords) and expanded the scope of comparative advertising to include a class of products and not restricted it to disputes between two competitors.
In recent times, the courts have held that companies should not be too sensitive when it comes to comparative advertising. Refusal of Injunctions against advertising campaigns alleged to be disparaging is a positive sign that Indian Courts do recognise the maturing of economies and consumers. This may just be the beginning of a new jurisprudence requiring companies to show greater tolerance to comparative advertising and a signal that market fights ought to be fought in the markets and not in a court of law.
In other words, in judging the "overall effect" of the advertisement, the Court may have to look into the question of what caught or catches the eye or attention of the audience.
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.